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The Three P’s Process + Procedures = Profit


Why are the first casualties of the current climate in today’s automotive marketplace time-tested and proven money-making policies and procedures? Why do we allow ourselves to stop doing the things that are designed to make us more front- and back-end profit at the very time when we need the most profit from every deal?

Some of these casualties are: any one or all 10 steps to the sale, a quality walk-around, a quality service tour, walking the new and used inventory daily, and negotiating from list.

Challenging times such as these are the times when you should review and reinforce your quality processes and procedures.

TRUST
The processes and procedures that have allowed you to be successful throughout the years are the ones you should stick with and trust. I find many dealerships are selling vehicles without doing a test drive or a quality trade walk-around, and there are sales managers who start from invoice and work up from there. You can stop wondering why your grosses are down.

According to Anthony, the system he designed to make the program successful is simple. He subscribes to a service, that for 10 cents per name allows him to access a list (which is updated daily) of bankruptcy court filings. Daily, he simply downloads the list of new filings, which he then sends a direct mail letter to each day. By doing this daily, it creates a steady flow of leads that can be worked at a consistent pace.

We tend to let the sales processes and procedures slide when things are slow. We are always afraid that the good salespeople will leave if we impose the rules when it is slow. We feel that when times are good we can hold their feet to the fire because of the income they are making. The opposite is actually the truth. When we allow our salespeople to shortcut the system, their grosses go down and they cannot make a livable income and that is why salespeople are now leaving our industry.

EXECUTION
U.S. military commanders know that chaos is the biggest obstacle most infantries cannot overcome in the heat of battle. Troops look to their generals for leadership and guidance; when their leaders are confident and assured the troops can do extraordinary things. The generals/leaders in the dealership are the dealer and the general manager; it is time to lead your troops to prosperity.

Soldiers rely more than anyone on regimented processes and procedures because their lives are dependent upon them. Soldiers have always and will always dig foxholes to provide them safety. Why? Because they work!

The dealership sales floor may not be a life-and-death battlefield but some dealers are telling me that either business picks up or they are not going to make it financially. Financial life and death for them -- you bet!

THE ANSWERS
The automotive business is challenging right now. Traffic is down, grosses are down and dealership personnel attitudes are down. So what’s next? How can you make lemonade from life’s lemons?

You must realize that everyone has a job to do. If everyone does his or her job well, everyone prospers. Here are some examples:

Job #1: Advertising – Increasing Your Up Count
The person in charge of advertising needs to figure out what it is going to take to increase traffic in the dealership. The answer that business is bad and nothing is working would be an excuse, except there are quite a few dealerships that are still thriving and making money. Yes, thriving, money-making dealerships are fewer right now, but why shouldn’t you be one of them?

The trick here is to identify the successful dealers in your area and model your advertising to theirs. What makes their advertising work so well? What do they do differently? What is their advertising strategy? Who is their advertising company? There is no reason to reinvent the wheel; just learn from other people’s successes.

Job #2: Desk Control – Selling Those Ups More Frequently
Sales managers have a very challenging job in this economic climate. Processes and procedures they used when business was successful are not necessarily working now. The closing ratio you had when business was strong is not as exciting now. Sales managers need to get involved in deals sooner, and they need to do so with the aim of holding the gross and selling the vehicle. If the up count is decreasing, maximize the number of turns you do get to improve closing ratios. Sales managers should be training and mentoring the sales force, helping them close deals so they can afford to stay with the dealership. You will need a top-notch, well-trained sales force when business turns around.

Job #3: F&I Production – Maximizing Income on Sold Ups
Why is it that when deliveries are fewer, F&I grosses tend to fall as well? The answer is twofold.

First, look at the quality of the deals that are coming to finance; fewer customers equate to more challenging deals. The sales department works very hard to make deals, and once made, they don’t want anything to jeopardize them. This is why we see more buyer's orders faxed to credit unions and outside banks in these times. Any and all shortcuts made in the name of deliveries are cutting directly into your revenue. F&I managers must get a quality turn to the finance office if you are to maximize every opportunity.

Now is not the time to allow the processes in F&I to falter. Menu selling has been and is the answer to get the most revenue out of your F&I department.

Second, the F&I manager’s attitude must be positive at all times when they are in front of a customer, no exceptions. What would you guess gives a higher profit per vehicle retail (PVR), a positive attitude or a negative attitude? The right attitude and processes are guaranteed to maximize your income in the F&I department.

Job #4: Easy Profit – Less is not More, More is More
There are several places in the dealership where you can make more revenue with no additional cost. The Windshield Wiper Close in the service department is just one example of how to make more revenue. What if you had your service advisors lift up the windshield wiper of every vehicle during check-in and ask customers, “Would you like us to change your wiper blades today? We are having a safety sale on wiper blades this month and the cost is $______.”

What if the closing percentage is just 20 percent? What would be the bottom-line increase to your service R.O. hours and income per year? How would your customer feel about your customer service? The Windshield Wiper Close allows the service advisor/salesperson to upsell your other products. Very profitable dealerships are the ones that are training their service advisors to be service salespeople as well.

CONCLUSION
The downturn in the automobile business is projected to continue, but you can take charge of your fortune now! The result of trying something innovative and different to increase your income will always be more successful than just sitting there hoping for a positive outcome.

Allow and enable your troops/sales force to achieve extraordinary things in the next year. Allow them to make your dealership the one everyone is trying to model their dealerships after. Your dealership's advertising, front and back profits and a well-run, income-maximizing service department will make you the model for dealers in your area, as well as at your 20 group (also a great source of ideas).

Attention to the Three P’s when times are slow can deliver good results and most certainly as our business environment improves—great results!

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